Ballmer did not say whether the palm-sized slates would actually be on sale in time for Christmas, nor did he say who would make them. Microsoft has been slow to respond to the iPad, and has also made little headway in mobile phones.

"You'll see new slates with Windows on them. You'll see them this Christmas," he told an audience of students, staff and journalists at the London School of Economics.

IT research firm Gartner expects 10 million tablet PCs to be sold this year as consumers begin embracing such devices, which include Dell's Streak and Asustek's Eee Pad. The Apple iPad alone sold 3.3 million in its first quarter.

But little has been heard about the device since HP agreed to buy smartphone maker Palm in April for $1.2 billion, and HP has said it plans a new crop of devices including tablets based on Palm software, although it will still offer Windows tablets.

Microsoft has also failed to make much headway in the smartphone market, where rivals like Apple and HTC are growing fast, while Research in Motion captured the corporate market with its BlackBerry.

Microsoft's Windows phone software had 8.7 percent of the smartphone market last year and that is expected to decline to 3.9 percent by 2014, according to Gartner.

Microsoft also ditched a feature phone aimed at teenagers in July after just three months.

"The job right now is we've got to get back seriously into the game of phones," Ballmer said.

Ballmer did not get his maximum bonus for the last fiscal year despite scoring the company's highest-ever sales, mainly because of missteps on phones and tablets.